Technology, Finance and Education

Yale Theatre

I have been trying out iTunes U by doing the Open Yale subject ECON252 Financial Markets. What attracted me to the subject was that the lecturer was Robert Shiller, one of the people responsible for the main residential property index in the US and an innovator in that area. Also, it was free. :)

I was interested in seeing what the iTunes U learning experience was like, and I was encouraged by what I found. While it was free, given the amount of enjoyment I got out of doing the subject, I think I’d happily have paid around the cost of a paperback book for it. I could see video recordings of all the lectures, or alternatively, read transcripts of them, plus access reading lists and assessment tasks.

The experience wasn’t exactly what you’d get if you sat the subject as a real student at Yale. Aside from the general campus experience, also missing were the tutorial sessions, professional grading of the assessments (available as self-assessment in iTunes U), an ability to borrow set texts from the library, and an official statement of grading and completion at the end. Also, the material dated from April 2011, so wasn’t as current as if I’d been doing the real subject today.

Of these, the only thing I really missed was access to the texts. I suppose I could’ve bought my own copies, but given I was trying this because it was free, I wasn’t really inclined to. Also, for this subject, the main text (priced at over $180) was actually a complementary learning experience with seemingly little overlap with the lectures.

While I tried both the video and transcript forms of the lectures, and while the video recordings were professionally done, in the end I greatly preferred the transcripts. The transcripts didn’t capture blackboard writing/diagrams well, and I sometimes went back and watched the videos to see them, but the lecturer had checked over the transcripts and they had additions and corrections in them that went beyond what was in the video. Also, I could get through a 1hr lecture in a lot less than an hour if I was reading the transcript.

Putting aside the form of delivery, the content of the subject turned out to be much more interesting that I expected at the beginning. Shiller provided a social context for developments in finance through history, explained the relationships between the major American financial organisations, and provided persuasive arguments for the civilising force of financial innovations (e.g. for resource allocation, risk management and incentive creation), positioning finance as an engineering discipline rather than (say) a tool for clever individuals to make buckets of cash under sometimes somewhat dubious circumstances. I’ll never think of tax or financial markets or insurance in quite the same way again.

I will quote a chunk from one of his lectures (Lecture 22) that illustrates his approach, but also talks about how technology changes resulted in the creation of government pension schemes. I like the idea that technology shifts have resulted in the creation of many things that we wouldn’t ordinarily associate with “technology”. By copying his words in here, I’ll be able to find them more easily in the future (since this is a theme I’d like to pick up again).

In any case, while I didn’t find the iTunes U technology to be a good alternative for university education, I think it’s a good alternative to reading a typical e-book on the subject. Of course, both e-books and online education will continue to evolve, and maybe there wont be a clear distinction in the future. But for now, it’s an enjoyable way to access some non-fiction material in areas of interest.

The German government set up a plan, whereby people would contribute over their working lives to a social security system, and the system would then years later, 30, 40 years later, keep a tab, about how much they’ve contributed, and then pay them a pension for the rest of their lives. So, the Times wondered aloud, are they going to mess this up? They’ve got to keep records for 40 years. They were talking about the government keeping records, and they thought, nobody can really manage to do this, and that it will collapse in ruin. But it didn’t. The Germans managed to do this in the 1880s for the first time, and actually it was an idea that was copied all over the world.

So, why is it that Germany was able to do something like this in the 1880s, when it was not doable anywhere else? It had never been done until that time. I think this has to do ultimately with technology. Technology, particularly information technology, was advancing rapidly in the 19th century. Not as rapidly as in the 20th, but rapidly advancing.

So, what happened in Europe that made it possible to institute these radical new ideas? I just give a list of some things.

Paper. This is information technology, but you don’t think – in the 18th century, paper, ordinary paper was very expensive, because it was made from cloth in those days. They didn’t know how to make paper from wood, and it had to be hand-made. As a result, if you bought a newspaper in, say, 1790, it would be just one page, and it would be printed on the smallest print, because it was just so expensive. It would cost you like $20 in today’s prices to buy one newspaper. Then, they invented the paper machine that made it mechanically, and they made it out of wood pulp, and suddenly the cost of paper went down. …

There was a fundamental economic difference, and so, paper was one of the things.

And you never got a receipt for anything, when you bought something. You go to the store and buy something, you think you get a receipt? Absolutely not, because it’s too – well, they wouldn’t know why, but that’s the ultimate reason – too expensive. And so, they invented paper.

Two, carbon paper. Do you people even know what this is? Anyone here heard of carbon paper? Maybe, I don’t know. It used to be, that, when you wanted to make a copy of something, you didn’t have any copying machines. You would buy this special paper, which was – do you know what – do I have to explain this to you? You know what carbon paper is? You put it between two sheets of paper, and you write on the upper one, and it comes through on the lower one.

This was never invented until the 19th century. Nobody had carbon paper. You couldn’t make copies of anything. There was no way to make a copy. They hadn’t invented photography, yet. They had no way to make a copy. You had to just hand-copy everything. The first copying machine – maybe I mentioned that – didn’t come until the 20th century, and they were photographic.

And the typewriter. That was invented in the 1870s. Now, it may seem like a small thing, but it was a very important thing, because you could make accurate documents, and they were not subject to misinterpretation because of sloppy handwriting. … And you could also make many copies. You could make six copies at once with carbon paper. And they’re all exactly the same. You can file each one in a different filing cabinet.

Four, standardized forms. These were forms that had fill-in-the-blank with a typewriter.

They had filing cabinets.

And finally, bureaucracy developed. They had management school. Particularly in Germany, it was famous for its management schools and its business schools.

Oh, I should add, also, postal service. If you wanted to mail a letter in 1790, you’d have trouble, and it would cost you a lot. Most people in 1790 got maybe one letter a year, or two letters a year. That was it. But in the 19th century, they started setting up post offices all over the world, and the Germans were particularly good at this kind of bureaucratic thing. So, there were post offices in every town, and the social security system operated through the post offices. Because once you have post offices in every town, you would go to make your payments on social security at the post office, and they would give you stamps, and you’d paste them on a card, and that’s how you could show that you had paid.

– Robert Shiller, ECON252 Financial Markets, 2011

Speaking of Bespoke

The Internet promises to disrupt many industries, but it’s finally getting around to disrupting the garment industry. There are now many sites devoted to providing exclusive-brand quality at mass-market-brand prices. They use approaches like out-sourcing design to their customers, taking a smaller profit margin than typical designer or bespoke operators, generating a larger volume of sales through global exposure via the Internet, and providing generous terms for dealing with wrong sizes.

Threadless and Cafe Press are the grand-daddies of the market, but there are now some Australian outfits getting in on the act, such as Shoes of Prey who are getting a profile for their high-end women’s footwear.

However, I want to do a shout-out for Carbon Copy Shirts who I’ve bought a few business shirts from. They have a great deal at the moment of 3 shirts for $99 that I’ve taken advantage of. Now the shirts have been through the wash a couple of times, I can say that they are good quality and they are in the regular wear cycle.

Anonymity is a trap

When I was back at Uni studying for my Comp Sci degree, I came across the tatty printout of a cartoon blu-tacked to the door of the computer club. It’s now become somewhat famous, with the immortal line: “On the Internet, nobody knows you’re a dog.”

That’s one of the great things about interacting with people online: that if you want, you can ensure people aren’t going to judge you by your race, religion, nationality, gender, or even species. The anonymity of the Internet provides a level of freedom to communicate that is hard to achieve elsewhere. And, if you would otherwise be at risk of retribution based on what you say, it can provide a measure of protection.

However, if you don’t need the protection, then anonymity can be a trap.

Another thing I picked up while doing my Comp Sci degree is that some program languages provide more flexibility than is usually needed, and it can get you into trouble. For example, in the C language, you can check whether a variable ‘x’ has a particular value (say 1) by writing if(x == 1), you can assign a value to a particular variable by writing x = 1, and you can also treat the assignment as a check (if you’re being clever) by writing if(x = 1). But if you didn’t mean to do that – and it was easy to overlook that you’d done it when you meant to write if(x == 1) – then your program will probably malfunction.

So, what I started to do was to write both my checks and assignments differently. By adopting a new habit, I avoided this problem resulting from the freedom that the programming language provided. I would simply swap the left and right hand sides of the check, so I would write x = 1 for assignment and if(1 == x) for checks, and if I accidentally wrote if(1 = x) then the compiler would generate an error and I could fix it before there was a chance for the program to malfunction.

The general learning here was that sometimes when you don’t need all the freedom offered, you can get yourself into trouble, but by adopting an appropriate habit, you can prevent yourself getting into as much trouble. This is also applicable to anonymity.

The sense of anonymity and freedom to behave badly without repercussions is one aspect of why otherwise polite people demonstrate rude behaviour when driving a car. Being anonymous allows them to “get away with it”. In research from 2006, it was found that participants drove more aggressively when they were anonymous.

The same effect applies online. In a study by Microsoft Research into bad behaviour by online users, it was concluded that

Anonymity granted in online environments and a lack of accountability (fear of punishment) have been identified as two of the primary causes of bad behavior.

Anonymous social/gossip sites such as, JuicyCampus (now deceased) and 4Chan are the sort of places where death threats, bullying behaviour and slanderous accusations have been known to pop up. This is clearly an extreme section of the Internet, and these sites’ reputations attract similar-minded contributors. The practice of writing anonymously is not restricted to such sites, however, and so the risk of bad behaviour exists more broadly.

Research from 2007 into anonymity in blogging found that over a third of bloggers were anonymous or used a pseudonym to hide their real identity. Many such bloggers surveyed were concerned that negative comments made about other people online could come back to bite them.

All of which suggests to me that a useful habit in this space is to identify yourself whenever you can, and reserve anonymity for those times when it is really needed. I know that when those who I write about or interact with online can see my real name and find my home page, I am much more likely to consider what I write before I hit “send”. Anonymity, by its nature, prevents another party from coming back at me, creating a social barrier that allows me to opt out of complying with social etiquette.

Now, I’m not in the camp of “those who don’t do anything wrong have nothing to fear”, and I acknowledge that there are many valid times when posting and commenting is best done anonymously. It’s just that being anonymous should not be the default mode of interacting online, and I think the Internet community would be better behaved if there was less of it. Anonymity is a powerful tool that should be always available but used sparingly.

Just like when I changed my habit of how to program in C in order to prevent myself doing something stupid, I’ll now be adopting the habit of identifying myself online in order to prevent myself saying something stupid.

Birth notices are dead

Harriet in mittens
Harriet in mittens

Several days after the birth of our baby girl Harriet, I realised that I hadn’t bothered to put an announcement in the paper. This was shortly followed by the realisation that there was no point – her arrival had been SMS’d, telephoned, emailed, Flickr’d and Facebooked to pretty much everyone we think would care, so why bother putting it in print? It doesn’t seem that many years ago that you would typically have put this sort of thing in the paper, if only as a keepsake, so there’s been rapid change here.

I checked the newspapers for the last few days to see if anyone else had put in a birth notice for Harriet. Nope. Tellingly, I confirmed this by using the web search interfaces for both The Age and the Herald Sun. The online world really has replaced the printed world in this regard.

It was also clear that hardly anyone was putting their birth notices in the papers either. There are just a handful of such announcements, and their number is dwarfed by the volume of death notices, which have at least five times as many. Understandably the demographic that death notices are intended for is not as web-savvy as the demographic that puts in birth notices.

Another aspect to this is that not only is online the more “traditional” means of notification for today’s parents, but it’s significantly better than newspapers. You can’t tell people about your new kid without also providing pictures, based on the demand we received for photos when we were a bit slack about making them available. Newspapers have never supported large, colour prints of your baby, unless you were at least on the A-list. Or they were born on an auspicious day, such as new year’s day, or the day when the Federal Government commits to maternity leave. While online, you can provide almost limitness photos to sate even the thirst of the most eager relation.

But now the question – if a newspaper cutting isn’t available as a keepsake, for the child to look back on in years to come, what is the online equivalent?